A new business model for journalism: enterprise funds

Advertising revenue trends

There are plenty of indicators that the business model for journalism is broken. According to the Pew Research Center, newsroom staffing is down 30 percent since 2000, print advertising revenues are down to 1982 levels, and sports / traffic / weather now makes up 40 percent of newscast content.

Journalism is considered a crucial public service; it’s known as the fourth estate or the fourth branch of governance (next to legislative, administrative, and judicial.)

According to Business Model Generation website and book, a business model “describes the rationale of how an organization creates, delivers, and captures value.” Defining the business model is a prime activity of marketing.

The business model for the fourth estate as always been wacky, in my opinion. Other branches of government can levy taxes and fees, sell bonds, impose fines and liens, and more. The vast majority of journalism is paid for through advertising, or sponsorship that actually looks a lot like advertising anyway.

Imagine Army tanks and their drivers sporting the same array of sponsor logos as NASCAR vehicles and their drivers. That’s what we ask of our fourth estate.

Since journalism performs a key public service, maybe its business model should resemble other public services. In fact, there’s a public service funding / business model that might work: the enterprise fund.

Many cities have enterprise funds, mechanisms for providing needed services on a per-user charge basis. San Francisco, where I work, uses enterprise funds to operate San Francisco International Airport, the Port of San Francisco, and the municipal railroad.

I used to run an alternative newspaper in Spokane, where by charter eight percent of annual city expenditures are earmarked for city parks. An enterprise fund for the parks operates the city golf courses, and a separate foundation raises and spends money for capital parks improvements. This combination of earmarked expenditures and structures for raising additional funds has maintained Spokane’s excellent park system for more than a century.

Maybe this model could be applied to journalism, to supply cities with more than just the hokey cable access reporting lampooned by Wayne’s World.

Other parts of government side aside funds for independent evaluation, such as evaluation research, inspector generals, and ombudsmen. It might be time to add journalist to the list.

(Business Model Generation and other books mentioned in this blog are available in the bookstore.)

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